DID REG FD LEVEL THE PLAYING FIELD?

CFO.COMAug 1, 2008

Researchers have found that the Security Exchange Commission’s Regulation Fair Disclosure rule has curtailed the amount of information that companies disclose to the public. Baljit Sidhu from the Australian School of Business, Tom Smith from Australian National University, and ROBERT WHALEY and RICHARD WILLIS from Vanderbilt University's Owen Graduate School of Management studied the effect of Reg FD by comparing cost components of the bid-ask spreads of NASDQ-listed stocks in the months before and after the Reg FD went into effect. "While Reg FD gave everyone the same info at the same time, what it's done is it has made firms release less information and it drove up the cost of trading," Robert Whaley, co-director of the Financial Markets Research Center at Vanderbilt, told CFO.com.